CITY OF GLENDIVELocal Government

2025-002 Audit report deadline CFDA Title: Drinking Water State Revolving Fund CFDA Number: 66.468 Federal Agency: United States Environmental Protection Agency Pass-through Entity: Montana Department of Natural Resources and Conservation Condition: Montana local governments with a June 30 fiscal year-end are required to submit audited financial statements to the Montana Department of Administration and, when applicable, the Federal Audit Clearinghouse by March 31 following year-end. The City's fiscal year 2025 audit was not completed and submitted by the required deadline. Context: During audit procedures, we reviewed applicable State of Montana and federal audit submission requirements and noted the fiscal year 2025 audit report was submitted after the required filing deadline. Criteria: Montana Administrative Rule 2.4.411 and the Uniform Guidance require audits to be completed and submitted within nine months following fiscal year-end. Effect: The City was not in compliance with required State and federal audit filing deadlines for fiscal year 2025. Cause: Additional time was required to correct and reconcile accounting records before the audit could begin. As a result, the audit was delayed and could not be completed by the required filing deadline. Recommendation: We recommend the City strengthen year-end closing and reconciliation procedures to ensure accounting records are complete and accurate prior to the start of the audit. Timely completion of these procedures will help facilitate audit completion and submission in accordance with State and federal requirements.

SEGREGATION OF DUTIES Criteria: Duties should be segregated to provide reasonable assurance that transactions are handled appropriately. Condition: There is a lack of segregation of duties among personnel. Effect: Transactions could be mishandled. Cause: There are a limited number of personnel for certain functions. Recommendation: The duties should be separated as much as possible, and alternative controls should be used to compensate for lack of separation. The governing board should provide some of these controls. Views of responsible officials and planned corrective actions: The government agrees with this finding and will adhere to the attached corrective action plan.

AUDITOR PREPARED FINANCIAL STATEMENTS Criteria: As part of its internal control structure, it is the government?s responsibility to prepare its financial statements and Schedule of Expenditures of Federal Awards (SEFA) in accordance with generally accepted accounting principles (GAAP). Condition: The government does not have the expertise to prepare or evaluate the selection and application of accounting principles and resulting disclosures and presentations within the auditor prepared financial statements and SEFA. Cause: The government is a small organization with limited resources. Effect: It is common for a small organization to rely on the audit firm to prepare the financial statements and SEFA; however, an audit firm cannot be considered part of the government?s internal control by professional standards currently in effect. Since some presentations and disclosures may be material to the financial statements and SEFA, this weakness in internal control would be classified as material. Recommendation: While it may not be cost effective to do so, we recommend the government consider hiring a qualified person to evaluate the auditor prepared financial statements and SEFA. Views of responsible officials and planned corrective actions: The government agrees with this finding and will adhere to the attached corrective action plan.